Practice question
A contract concededly meets every investment-contract element. It is sold in a transaction that also satisfies a statutory exemption from registration. The seller says that exemption means the contract was never a security at all. Which answer is correct?
- Classification as a security and registration exemption are distinct inquiries
- Every exempt transaction changes the instrument into a nonsecurity
- Only registered instruments can meet the definition
- An exemption automatically removes all securities-law obligations
- Investment contracts cannot ever be sold in exempt transactions
Legal references
- RA8799 Securities Regulation Code: https://lawphil.net/statutes/repacts/ra2000/ra_8799_2000.html Sections3.1(b),8–10.
- Power Homes Unlimited v. SEC, GR164182, February26 2008 MAIN: https://lawphil.net/judjuris/juri2008/feb2008/gr_164182_2008.html MAIN investment-contract definition.
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